New Delhi (TIP)- The Union government on Friday, Nov 21, announced the implementation of four labour codes passed by Parliament in 2019-20 meant to replace a welter of complex, British-era legislation, kicking off a set of reforms aimed at attracting investment, spurring job creation and making it easier for firms to hire and fire employees.
The new employment rules mark a continuation of recent regulatory reforms such as the rationalisation of the Goods and Services Tax, and the Income Tax Act, 2025, which have simplified the burden of compliance for consumers and businesses. They also mark the beginning of a new labour-market regime that creates a statutory backing for a national minimum wage for the first time, provide social-security benefits to workers across sectors and allows women to work night shifts. The new laws also define gig workers.
“Today is a historic day for my worker brothers and sisters. Our government has implemented four labour codes. This is the biggest reform in the interest of workers since independence. It will greatly empower the workers of the country. While it will make compliance with rules much easier, it will also boost ‘Ease of Doing Business’,” Prime Minister Narendra Modi said on X.
The government notified the four laws and rules needed to make them operational effective November 21, Union labour minister Mansukh Mandaviya said. The announcement closes the loop on years of tense negotiations on the sensitive sociopolitical and electoral issue of labour in a country long hobbled by a web of archaic and complex employment rules. “Through these reforms, a robust ecosystem will be created that will protect the rights of our workers in the future and give new strength to India’s economic growth. This will not only create new job opportunities but also increase productivity. Along with this, our journey towards a developed India will also gain momentum,” Modi added on X.
Even though successive governments and most economists agree that labour reforms in the world’s fifth-largest economy were overdue and updated laws are necessary to create employment for the nearly one million job-seekers entering the Indian labour market each month, fears of a political backlash and resistance by major trade unions had kept the government from implementing the codes.
“From today, the new labour codes have been implemented in the country. With expanded social security, stronger protections and nationwide portability of entitlements, the codes place workers, especially women, youth, unorganised, gig and migrant workers, firmly at the centre of labour governance,” Mandaviya said. The Code on Wages, 2019, Industrial Relations Code, 2020, Occupational Safety, Health and Working Conditions (OSH) Code, 2020 and the Code on Social Security, 2020 will replace a set of 29 labyrinthine laws. New reforms include mandatory formal, written appointment letters to all workers, social security benefits, minimum wages, free annual health check-up for workers above the age of 40, and allowing women to work night shifts across sectors. The new codes also allow women entry into sectors considered hazardous and require special safety clearances, such as mining for the first time.
“Fixed-term employees become eligible for gratuity after one year of continuous service (earlier five years)…wages now include basic pay, dearness allowance, and retaining allowance; 50% of the total remuneration (or such percentage as may be notified) shall be added back to compute wages, ensuring consistency in calculating gratuity, pension, and social security benefits,” said a government statement.
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